Diversified commodities company Olam International (OLAM.SI) is aiming to boost production volume by 15-20% annually as it plans expanding into upstream sugar and palm oil ventures, its chief executive said on Friday.

Group managing director and CEO Sunny Verghese said Olam was eyeing 10,000 hectares of sugar plantations in Indonesia, Brazil or Africa to enable it to set up crushing plant with a yearly capacity of at least 2 million tonnes.

 

He also said the company, in which Singapore state investor Temasek Holdings (TEM.UL) has a stake of about 14%, is planning to develop between 50,000 and 100,000 hectares of palm oil plantations in Africa.

 

“We are focused on trying to build volume growth of between 15-20% annually,” Verghese told Reuters.

 

The Singapore-based firm is a global supply chain manager and processor of agricultural products and food ingredients. It also has a financial services business which includes a commodity fund.

 

It trades about 20 different commodities from Australian almonds to African cashew as well as operating coffee plantations in Laos and a rice business in Thailand.

 

The company recorded a volume growth of 22.5% for the full year ended June 2010 to 7 million tonnes, which helped it boost attributable net profit by nearly 43% to $359.7 million.

 

The full year results were ahead of analysts expectation of $247.7 million.

 

Verghese said the venture into sugar and palm oil is likely to take place after 2011.

 

Olam’s plans come after the world’s largest palm oil company, Wilmar International (WLIL.SI), offered to pay US$1.5 billion ($2.04 billion) for Sucrogen, the world’s fifth largest sugar company, from its parent, Australia’s CSR Ltd .

 

Wilmar is also looking at building up a 200,000 hectares sugar plantation in Indonesia’s Papua and setting up more refineries in the country which is suffering from an annual sugar deficit of nearly 2 million tonnes or 41% of its yearly consumption.

 

Rising raw material prices and narrowing margins have pressured some commodities companies in recent months but Verghese said he expected Olam to benefit from the situation as the company moves towards upstream operations.

 

“I think we are positioning ourself to be able to take advantage of the long-term trend of the industry, which points to the fact that in 20 to 25 years you will expect that people who own the production and plantation assets get a larger share. Therefore we want to have some of our assets upstream.”